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Retail management, VTU

Retail Management module 5 to Module 8 of visvesvaraya technological university.

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Retail management, VTU

  1. 1. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Part b: Retailing
  2. 2. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Retail Management Introduction Meaning “Retailing consists of activities involved in selling goods and services to ultimate consumers for personal consumption” cuoghan , Anderson, Louis “Retailing is a set of business activities that add value to the products and services sold to consumers for their family or personal use.”
  3. 3. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Characteristics 1. Average amount of sales transaction is much less than the manufacturer, so there is a need for tightly controlling the costs, maximizing the no. Of customers, emphasizing more on special promotion etc. 2. The survey shows that a large number of buyers make impulse purchases, this behavior indicates the value of in store displays- the ability to forecast is difficult.
  4. 4. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Contd.. All retailers offer an assortment of products, but they also specialize in the assortment they offer The bulk items shipped by the manufacturer is offered in smaller quantities tailored to individual customers. Holding inventory – products are available at the disposal of consumers so they can keep a small inventory at home There is direct end user interaction and retailing increases the value of products and services. Location is a critical factor in retailing.
  5. 5. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Retail industry in India Role of retailing.
  6. 6. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Trends in Retailing. 1. Spatial convenience 2. Increased power of retailer 3. Growing Diversity of Retail formats 4. Emergence of region specific formats 5. Entry of International Players 6. Mall Development
  7. 7. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Retail strategy Prof. Prasad Kulkarni
  8. 8. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Retail Strategy An overall plan for guiding a retail firm Influences the firm’s business activities Influences firm’s response to market forces
  9. 9. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Elements of a Retail Strategy
  10. 10. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Six Steps in Strategic Planning 1. Define the type of business 2. Set long-run and short-run objectives 3. Determine the customer market 4. Devise an overall, long-run plan 5. Implement an integrated strategy 6. Evaluate and correct
  11. 11. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Benefits of Strategic Retail Planning Provides thorough analysis of the requirements for doing business for different types of retailers Outlines retailer goals Allows retailer to determine how to differentiate itself from competitors Allows retailer to develop an offering that appeals to a group of customers
  12. 12. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Benefits of Strategic Retail Planning_2 Offers an analysis of the legal, economic, and competitive environment Provides for the coordination of the firm’s total efforts Encourages the anticipation and avoidance of crises
  13. 13. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Aspects of Target’s Strategy Growth-oriented objectives Appeal to a prime market Distinctive company image Focus Strong customer service Multiple points of contact Employee relations Innovation Commitment to technology Community involvement Constantly monitoring performance
  14. 14. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Figure 1.10 Applying the Retail Concept Customer Orientation Coordinated Effort Value driven Goal Orientation Retailing Concept Retail Strategy
  15. 15. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Approaches to the Study of Retailing Institutional Functional Strategic
  16. 16. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Applying the Retail Concept Customer Orientation Coordinated Effort Value driven Goal Orientation Retailing Concept Retail Strategy
  17. 17. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Retailing in India Prof. Prasad Kulkarni
  18. 18. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Ministry of statistics ( report by PWC)
  19. 19. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Deloitte India retail report 2013
  20. 20. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  21. 21. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  22. 22. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  23. 23. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Michel page India retail report 2013
  24. 24. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Multi brand retailing (PWC)
  25. 25. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Emerging trends in the organized retailing in India Prof. Prasad Kulkarni
  26. 26. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Trends ( Source: International Journal of Business and Management Tomorrow Vol. 2 No. 10 )
  27. 27. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  28. 28. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Entry of International Players With global players knocking at the door, waiting for the government to open up the floodgates, all the big Indian organized retail companies are feeling the heat. The fight is now not between Big organized retail stores (3%) and Unorganized Kirana Shops (97%), but its between global giants like Wal-Mart, Tesco and Shopper’s Stop, Pantaloons
  29. 29. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Emergence of new Retail Formats Currently the retail sector in India is populated with the traditional mom-and-pop stores and some 1000 odd supermarkets under organized retail chains. A daring few ventured into the Hypermarket segment like a big bazaar with successful results and this format is being fast replicated by other players. This experience indicates that the Indian consumer has matured to the next level of shopping experience. Given the Indian conditions and the vast diversity a single format may not be possible for the national presence, but region specific formats may evolve. An interesting observation is that lack of presence of organized retail chains in the rural/semi urban centers as over 60% of Indian population is still in these parts. An ideal “no frills” model to start with would be ideal for the rural markets; this would help to take them to the next level of supermarket experience.
  30. 30. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Specialty Malls Keeping in mind the astonishing pace with which new supply is expected to enter the market, many mall developers, in a bid to offer a distinctive value proposition, are planning to develop ‘specialty malls’. These niche developments shall emerge as one- stop destinations in their chosen product categories. The Delhi- based Aerens Group has developed Gold Souk, an exclusive jewellery mall that is already operational in Gurgaon and has ambitious plans to replicate the concept across the country. Further, a number of analogous developments like a ‘Wedding Mall’ by Omaxe Group, ‘Automobile Mall’ etc are also in the offing. In line with international trends, ‘Home Malls’ offering the entire range of building and interior décor solutions are also coming up in various parts of the country including Pune (‘Ishanya’ promoted by Deepak Fertilizers and Petrochemicals Corporation Ltd), Gurgaon & Kolkata.
  31. 31. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Wedding mall in guragoan
  32. 32. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Price corrections IT in retail management Traditional retailers in mall. Suppler retail relationship. Innovation in transportation logistics. Community involvement Online retailing.
  33. 33. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Retail Challenges Organizing Retail in India-Challenges Heterogeneous market – Product offerings in different stores across the country will be very different – No standard mode of operation across formats – Market not mature (has to be validated) Infrastructure will bring about logistical challenges – Though, improvements in road networks, power supply are underway Trained employees with understanding of retail business are inadequate compared to the needs of organized retail Barriers to Entry – High taxes, bureaucratic clearance process and labour laws High cost of real estate – though over 600 malls are to come up all over the country by the next 4 years Indian retailers are deeply entrenched, are expanding and building on logistics and technology initiatives
  34. 34. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Processes •Complex Processes - Multiple MRP, Deals & Promotions, Forecasting & Replenishment, Lean supply chain – JIT inventory, flow through warehouse •Evolving processes in Supply chain & merchandising •Global Best Practices not adopted Consumer Infrastructure •High disposable income •Changing consumer preferences •28 states, 100+ religion, 250+ festivals •Supply chain not reliable. Cold storage infrastructure evolving •Outsourced transportation •Low level automation in warehouses Supplier/ Vendor Current IT •Little or no collaboration between vendor & retailer •Low fill rates from vendors •Highly localized assortments leading to relationship with multiple vendors •Complex trading contracts and off invoice discounts •Multiplicity of disparate Systems & Data Formats •No architecture roadmap •Base ERP and home grown POS solutions. Low investments in store systems •No investments in planning & optimization technologies At ground level ….
  35. 35. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Retail formats Prof. Prasad Kulkarni
  36. 36. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Drivers for Indian RetailHigh Income Opportunities Changing Attitude International Exposure Necessities to Lifestyle •Service Sector: creating new jobs. •Working Population in 2010 will 70% •IT Industry: increasing professional opportunities •Rising Salary levels •MNCs entering India and homegrown companies going global •From Save to Spend •High disposable income family structures on a rise •Nuclear Families •DINKS (Double Income No Kids) •Multi income families •International travel •Exposure to global trends •Highest Growth in outbound tourists in the world •Shift of expense basket from basics to lifestyle products •Increased spend on Apparel, personal care, entertainment •Easy Bank credit boosts retail Customer value drivers are continuing to fragment as a result of changing demographics & value systems Consumption expenditure is 60 % of India’s GDP Market & Government •Easing out on Import barriers, Government sponsorship taking shape (FDI Policy, Tax and Duty structure, Subsidies) •Fluid retail Segments •M-Commerce & e- Commerce boosts retail
  37. 37. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Global Heavyweights in Indian Retailing Joint Ventures Product Range Retail Formats Bharti-Walmart (with $2.5 Billion investment by Bharti) Food & grocery, electronics & appliances, clothing & footwear, furniture & furnishing, household articles. Hypermarkets, Supermarkets and Convenience Carrefour-Landmark Food and groceries, FMCG, apparel and electronics Hypermarkets Home Retail Group plc - Shopper's Stop Ltd and Hypercity Retail India Private Ltd Franchising the Argos concept under the terms of the arrangement, Argos will be providing its brand, catalogue and multi-channel expertise and IT support Multi Channel propositions Tata-Woolworths Sourcing agreement for Consumer durables and Foods under brand name CROMA Multi brand retail chain Staples Inc – Pantaloon Retail Global Sourcing of Office equipments across various businesses Cash and carry Reliance Food & grocery, electronics & appliances, clothing & footwear, furniture & furnishing, household articles. Multi format and Multi Category Birla Food & grocery, electronics & appliances, clothing & footwear, furniture & furnishing, household articles. Convenience and Supermarket
  38. 38. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Format Definition Formats Description Key categories retailed Typical size Sq.ft. Example Hyper markets A large superstore, combining a supermarket and departmental store, offering full lines of grocery and general merchandise all under one roof Food, groceries, apparel, furnishings, consumer durables 15,000-100,000 Big Bazaar, Hypercity, Spencer, Star India Bazaar, Vishal Megamart Super markets A large self service outlet offering food and household goods Food, groceries, medicines 3,000-15,000 FoodWorld, Trinethra, Subshiksha, Food baazar Departmental stores A large self service outlet offering a variety of merchandise Apparel, Jewellery, watches, fashion accessories, footwear, furniture, furnishings 10,000-50,000 Shopper’s Stop, Lifestyle, Pantaloon, Westside Category killers Large speciality stores focussed on one or a few categories of merchandise, offering a wide selection at low prices Electronics, office supplies, apparel 20,000-100,000 Best Buy – Circuit City, Staples Convenience stores Small size, easily accessible stores offering a quick shopping, fast check out experience and extended working hours Food, groceries, medicines 500-2,000 In&Out, Trinethra, Subhiksha, traditional stores
  39. 39. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Retail Organization The term retail organization refers to the basic format or structure of a retail business designed to cater to the needs of the end customer.
  40. 40. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Classification retail units On the basis of ownership a. Sole proprietorship b. Partnership: c. Joint venture d. Limited liability Company (public and private)
  41. 41. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. On the basis of operational structure. a. Independent retail unit: b. Retail Chain c. Franchising: d. Leased Department or Shop-in-shop e. Co-operative Outlets
  42. 42. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. On the basis of retail location a. Retailers in a free-standing location b. Retailers in a Business-associated Location c. Retailers in Specialized Markets d. Airport Retailing:
  43. 43. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Retail environment in India Prof. Prasad Kulkarni
  44. 44. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Based on PWC report 2013 India’s growth has slowed to 6.5% in the current fiscal, dragged down by a nine-year low of 5.3% in the March quarter on account of poor performance of the manufacturing sector. This is due to the cascading effect of the global slowdown that originated from developed economies and has impacted both China and India, the major contributors to the world GDP. However, despite these short-term difficulties, the medium outlook is more positive, states an OPEC report.
  45. 45. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. A strong GDP growth, rising consumer confidence, consumption-based behaviour, increasing income, and a large pool of consumers provide windows of opportunities for global retailers to invest in the Indian market. Largely deals are happening in the online model whether it is pharmacy, apparel, baby care or books. Considering that we have the youngest population in the world, such companies are bound to see growth, making it inevitable for financial investors to be present in this segment.
  46. 46. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Mergers and acquisations
  47. 47. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Legal environment
  48. 48. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  49. 49. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  50. 50. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  51. 51. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Demographic environment
  52. 52. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. IT in retail Prof. Prasad Kulkarni
  53. 53. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Information technology in retail operation Retail demand forecasting Inventory management Store management Windows mobile based solutions in retailing Mobile point of sale RFID and location tracking. Business intelligence in retail
  54. 54. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Standard ERP/CRM tools. POS terminals Bar code readers. Cloud computing Smart operating system.
  55. 55. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Store Location Prof. Prasad Kulkarni
  56. 56. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Retail Location Location decisions can be complex, costs can be quite high, there is often little flexibility once a location has been chosen and the attribute of location have a strong importance to retailers overall strategy.
  57. 57. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Importance of Location Decision: 1. Location is a major cost factor because it :  Involves large capital investment  Affects transportation cost  Affects human resources 2. Location is a major revenue factor because it  Affects the amount of customer traffic  Affect the volume of business
  58. 58. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Levels of Location Decision and its Determining Factors: level of location Decision city Area within city site selection
  59. 59. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Selection of a city: Factors to be considered for selection of a city 1. Size of the city’s trading area 2. Population or population growth in the trading is 3. Total purchasing power and its distribution 4. Total retail trade potential for different lines of trade 5. The retailer also consider, number, size, quality of competition before selecting a city. 6. Development cost
  60. 60. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Selection of an Area or Type of Location within a city. Evaluation of the following factors required Customer attraction power of a shopping district or a particular store (commercial street-Bangalore, Chandni Chowk in Delhi) Product lines carried by other stores, number of stores in the area. Availability of access routes- There should not be traffic jam and congestion Nature of zoning regulations Direction of the spread of the city
  61. 61. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Selection of a specific Site 1. Adequacy and potential of traffic passing the site:. 2. The ability of the site to intercept the traffic following past the site. 3. Complementary nature of adjacent stores:
  62. 62. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Type of Retail Location: 1. Free standing location : 2. Neighborhood stores. 3. Highway stores. 4. Business associated location: This can further be classified into two: a) PLANNED SHOPPING b) Unplanned business districts
  63. 63. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Unplanned business districts An unplanned business district is a type of retail location where two or more retail stores locate together on individual consideration rather than on the basis on any long-rang collective planning. We may find 4-5 shoe stores, 3-4 medical stores in a cluster, but no grocery store. Connaught place in New Delhi i) Downtown or central Business District: ii) Secondary Business District:. iii) Neighborhood Business District:) iv) Suburban business District: b) Planned Shopping centers.
  64. 64. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. PLANNED SHOPPING A planned shopping center consists of a group of architecturally owned or managed stores, designed and operated as a unit, based on balanced tenancy and surrounded by parking facilities. 1. Regional shopping center malls:. 2. Neighborhood/community Shopping Centre:. 3. Specialized Markets. 4. Periodic Markets
  65. 65. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Trading Area: A trade area is a contiguous geographic area from which a retailer draws customers that account for the majority of a store sale. A trade is a may a part of a city, or it can extend beyond the city’s boundaries. A trade area can be divided into 2 or 3 zones. Trade Area Analysis: It is necessary to estimate market potential, understand consumer profile, competition etc. GIS ( Geographical Information System – combine digitized mapping with key location data ) used for this purpose. A saturated trade area offers customers a wide variety of merchandise, which also ensures impressive
  66. 66. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Site Selection Analysis A retailer has to consider the following factors while selecting a site. 1. The kind of products sold 2. Cost Factor in Location Decision. 3. Competitor location 4. Ease of traffic flow and accessibility 5. Parking and Major Thoroughfares 6. Market Trends 7. Visibility
  67. 67. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Selection of a particular shopping center or Market Area 1. Merchants’ Association 2. Responsiveness of the landlord 3. Zoning and planning 4. Leases 5. Building Layout
  68. 68. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Location Assessment Procedures 1. Checklist Analysis 2. Analogue Analysis. 3. Financial analysis. 4. Regression Modeling 5. Retail Area Development
  69. 69. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  70. 70. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Store layout and space planning Prof. Prasad Kulkarni
  71. 71. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Layout The logical arrangement of the physical facilities of a business that contributes to efficient operations, increased productivity, and higher sales.
  72. 72. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. FIVE ELEMENTS OF PHYSICAL STORE DESIGN The physical design of a retail store is a combination of five key Design elements. 1. The exterior, 2. The interior space, 3. Fixtures, 4. Merchandise 5. People
  73. 73. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. The selection of layout depends on following: i) Nature of the product category ii) Width and depth of the product range iii) The fixtures and accessories utilized iv) The physical size and shape of the retail store
  74. 74. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. LAYOUT: EXTERNAL FACTORS 1. Size must be adequate to accommodate business needs. 2. Appearance must create the proper image or “personality” for the business in the customer’s eyes. 3. Entrances must invite customers to come in. 4. Create effective window displays and change them often; they can be powerful sales tools. 5. Must comply with the Americans with Disabilities Act (ADA). 6. Pay attention to the business sign, the most direct method of reaching potential
  75. 75. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. A BUSINESS SIGN 1. Tells potential customers who you are and what you’re selling. 2. Must comply with local sign ordinances. 3. Should be visible, simple, and clear. 4. Should be changed periodically to avoid becoming part of the background. 5. Should be legible both day and night. 6. Must be maintained properly.
  76. 76. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. BUILDING INTERIORS 1. Ergonomics is an integral part of any design. 2. Proper layout and design pays off in higher productivity, efficiency, or sales. 3. Proper lighting is measured by what is ideal for the job being done. 4. Careful selection of colors can create the desired impressions among customers and employees. 5. Appealing to all of the customer’s senses can boost sales.
  77. 77. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. THREE RETAIL LAYOUT PATTERNS Grid – Rectangular with parallel aisles; formal; controls traffic flow; uses selling space efficiently. – Supermarkets and self-service discount stores. Free-Form – Free-flowing; informal; creates “friendly” environment; flexible. – Small specialty shops. Boutique – Divides store into a series of individual shopping areas, each with its own theme; unique shopping environment. – A small department stores.
  78. 78. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Layout guidelines Know your customers’ buying habits and plan your layout accordingly. Display merchandise as attractively as your budget will allow. Display complementary items together. Recognize the value of floor space; never waste valuable selling space with non- selling functions.
  79. 79. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Types of layouts Straight Floor Plan This is very optimal and useful store layout that can be applied To almost all types of retail stores. It makes use of walls and Fixtures to create small defined spaces within the retail store. It Is also a very cost efficient design.
  80. 80. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  81. 81. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Diagonal floor plan A good store layout that is useful for self- service retail outlets is The diagonal floor plan. It offers the advantage of outstanding Visibility to both cashiers and customers. This plan helps customers move easily within the store.
  82. 82. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  83. 83. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Angular floor plan The angled floor plan is often adopted by a high - end specialist Stores. This employs differently shaped and curved fixtures too Develop a luxurious store design. The soft angles provide a more Elegant way to move customers within the store.
  84. 84. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  85. 85. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Geometric floor plan The clothing and apparel outlets typically use a geometric floor plan. In this design, as shown in utilizes racks and fixtures to develop an interesting store design without incurring high costs.
  86. 86. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  87. 87. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Mixed floor Area Such floor plans utilize the elements from the diagonal and angular floor plans to create a function-specific store layout. This layout facilitates the movement of customer traffic towards the wall and the back of the store. This layout generally used by stores which stock intimate products.
  88. 88. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  89. 89. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Products and merchandise management Merchandise management is the process by which a retailer attempts to offer the right quantity of the right product at the right place and time while meeting the retail firm's financial goals. Merchandise management is the analysis, planning, procurement, handling and control of the merchandise investment of a retail operation
  90. 90. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Component of merchandise management: 1. Analysis, 2. Planning 3. Control, 4. Acquisition, 5. Handling.
  91. 91. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. The merchandise Mix Merchandise variety –number of different of product lines that a retailer stocks in the store. Merchandise assortment refers to the number of different product items the retailer stocks within a particular product line. Merchandise support deals with the planning and control of the number of units the retailer should have on hand to meet the expected sales for a particular period. Merchandise Budget is a financial tool for planning and controlling a retailer's merchandise inventory investment.
  92. 92. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Merchandise Budge plan The four important components of the merchandise budget plan: 1. Projected sales- Expected or projected rupees volume of sales for each merchandise. 2. Inventory plan – Beginning of the month ratio: BOM=planned monthly sales*desired stock/sales ratio. The week supply method is for determining stock Percentage variation Method Basic stock method
  93. 93. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Estimated reduction 1. Markdowns 2. Discounts 3. Shortages Estimated purchase levels Planned purchases are calculated as follows Planned monthly sales +planned monthly reductions+Desired end of the month stock =Total stock needs for the month-planned BOM stock Planned monthly purchase
  94. 94. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Merchandise Planning in Units The impact of external factors on merchandise unit plans is as follows: 1. Target market analysis: 2. Competition Analysis 3. Breadth 4. Depth 5. Consistency.
  95. 95. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Model Stock plans: A model stock plan is a plan for maintaining adequate merchandise on hand. It characterizes the decisive items and their respective quantities that should be on hand for each merchandise line the retail business is dealing in and is developed after the retailer decides what relative importance will be placed on each dimension of the merchandise mix. A model stock plan is a quantitative method, which provides guidelines on the size, color, brand and composition of stock that specify the exact nature of the merchandise. Model stock planning comprises the following steps: 1 . Identify the consumer drive product service attribute 2. Identify the number of levels in each attribute identifier
  96. 96. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. CATEGORY MANAGEMENT Category management is the process of managing a retail business with the objective of maximizing the sales and profits of a category rather than the performance of individual brands or models. A category is an assortment of items that the customer sees as reasonable substitutes for each other. For example, retailers in ready to wear segment consider female and male clothing as one category.
  97. 97. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Advantages of Category Management Increased sales Reduced Inventory management Improved route and warehouse efficiency.
  98. 98. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. The Essential Elements of Effective Category Management 1. The category should be arranged as if consumers could stock the shelf themselves 2. Category composition should be on the basis of time, space and product benefit 3. Category management should drive multiple item purchase 4. Category management is a dynamic, proprietary set of decision, not a standard, universal practice. 5. It is directed to create value for the consumer rather than facilitating relations between supplier and retailer. 6. Category management plan should be based on the overall competitive environment in a specific trading area.
  99. 99. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. VARIOUS REPLENISHMENT POLICIES Fixed cycle of Replenishment: Replenishment takes place at predetermined time intervals, which are decided jointly by the retailers and suppliers. It is useful when: -Predictable demand and sales pattern, high transportation cost, Batch production with large batch size. Continuous Replenishment: It is decided by the supplier and retailer. Whenever inventory dips below the required level of purchase order is automatically generated leading to fulfillment. It is useful when -Unpredictable sales pattern, goods for which historical sales is not available
  100. 100. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. EVALUATING MERCHANDISE PERFORMANCE ABC Analysis: Self –through Analysis
  101. 101. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Storing or transmitting information EDI Data warehouse CPFR
  102. 102. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Visual Merchandising Prof. Prasad Kulkarni
  103. 103. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. The Elements of a Retail Image
  104. 104. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Atmosphere The psychological feeling a customer gets when visiting a retailer – Store retailer: atmosphere refers to store’s physical characteristics that project an image and draw customers – Nonstore retailer: atmosphere refers to the physical characteristics of catalogs, vending machines, Web sites, etc.
  105. 105. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Visual Merchandising Proactive, integrated atmospherics approach to create a certain look, properly display products, stimulate shopping behavior, and enhance physical behavior
  106. 106. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Visual Merchandising and Gap
  107. 107. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. The Elements of Atmosphere
  108. 108. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Exterior Planning Storefront Marquee Store entrances Display windows Exterior building height Surrounding stores and area Parking facilities
  109. 109. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Alternatives in Planning a Basic Storefront Modular structure Prefabricated structure Prototype store Recessed storefront Unique building design
  110. 110. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Store Entrances How many entrances are needed? What type of entrance is best? How should the walkway be designed?
  111. 111. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. How a Store Entrance Can Generate Shopper Interest
  112. 112. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. General Interior Flooring Colors Lighting Scents Sounds Store fixtures Wall textures Temperature Aisle space Dressing facilities In-store transportation (elevator, escalator, stairs) Dead areas Personnel Merchandise Price levels Displays Technology Store cleanliness
  113. 113. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Eye-Catching Displays from Toys “R” Us
  114. 114. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Allocation of Floor Space Selling space Merchandise space Personnel space Customer space
  115. 115. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. How a Supermarket Uses a Straight (Gridiron) Traffic Pattern
  116. 116. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. How a Department Store Uses a Curving (Free-Flowing) Traffic Pattern
  117. 117. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Grouping Types Functional product groupings Purchase motivation product groupings Market segment product groupings Storability product groupings
  118. 118. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Straight Traffic Pattern Advantages An efficient atmosphere is created More floor space is devoted to product displays People can shop quickly Inventory control and security are simplified Self-service is easy, thereby reducing labor costs Disadvantages Impersonal atmosphere More limited browsing by customers Rushed shopping behavior
  119. 119. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Piggly Wiggly’s Open Traffic Design
  120. 120. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Curving Traffic Pattern Advantages A friendly atmosphere Shoppers do not feel rushed People are encouraged to walk through in any direction Impulse or unplanned purchases are enhanced Disadvantages Possible customer confusion Wasted floor space Difficulties in inventory control Higher labor intensity Potential loitering Displays may cost more
  121. 121. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Approaches for Determining Space Needs Model Stock Approach – Determines floor space necessary to carry and display a proper merchandise assortment Sales-Productivity Ratio – Assigns floor space on the basis of sales or profit per foot
  122. 122. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Interior (Point-of-Purchase) Displays Assortment display Theme-setting display Ensemble display Rack display Case display Cut case Dump bin
  123. 123. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Costco’s Online Storefront
  124. 124. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Online Store Considerations Advantages Unlimited space to present product assortments, displays, and information Can be customized to the individual customer Can be modified frequently Can promote cross-merchandising and impulse purchasing Enables a shopper to enter and exit an online store in a matter of minutes Disadvantages Can be slow for dialup shoppers Can be too complex Cannot display three-dimensional aspects of products well Requires constant updating More likely to be exited without purchase
  125. 125. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Making the Shopping Experience More Pleasant
  126. 126. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. The Shopping Cart’s Role in an Enhanced Shopping Experience
  127. 127. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Community-Oriented Actions Make sure that stores are barrier-free for disabled shoppers Show a concern for the environment by recycling trash and cleaning streets Supporting charities and noting that support at the company Web site Participating in anti-drug programs Employing area residents Running special sales for senior citizens and other groups Sponsoring Little League and other youth activities Cooperating with neighborhood planning groups Donating money and/or equipment to schools Carefully checking IDs for purchases with age minimums
  128. 128. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  129. 129. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Props Objects added that support the theme of the display. – Functional Props: used to physically support the merchandise. (mannequins, stands, panels, screens, etc) – Decorative Props: used to establish a mood or an attractive setting for the merchandise being featured (ex: mirrors, flowers, seashells, surfboards, etc) – Structural Props: used to support functional and decorative props and change the physical makeup of displays. (boxes, rods, stands, stairways, etc)
  130. 130. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  131. 131. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Signage Includes individual letters and complete signs. Often on some kind of holder. Can tell a story about the goods. Should try to answer customers questions. Should be informative and concise. Can include prices, sizes, department location.
  132. 132. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Window Displays Seen from outside of the store. First contact with the customer. Can have a series of windows. Advantages of Window Displays: – Establish and maintain an image – Arouse curiosity Disadvantages of Window Displays: – Expensive to design and maintain – Requires space – Merchandise can get ruined (sun ,etc) – Glare
  133. 133. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Types of Window Displays Enclosed windows: have a full background and sides that completely separate the interior of the store from the display window. – Ramped windows: floor is higher in back than in front – Elevated windows: from 1 to 3 feet higher than sidewalk – Shadowbox windows: small, boxlike display windows
  134. 134. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  135. 135. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Types of Window Displays Semi-closed windows: have a partial background that shuts out some of the store interior from those viewing the window Open Windows: have no background panel and the entire store is visible to people walking by Island windows: four-sided display windows that stand alone, often in lobbies.
  136. 136. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  137. 137. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Color Can influence behavior – Warm colors increase blood pressure, respiratory rate and other physiological responses – attract customers and gain attention but can also be distracting – Cool colors are relaxing, peaceful, calm and pleasant – effective for retailers selling anxiety-causing products
  138. 138. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Colour Sells Colour is what customers see first. More than anything else, colour makes people stop and look. For many customers colour is more important than the size or the style of the product.
  139. 139. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  140. 140. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  141. 141. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Notice how each colour in rows 2 through 5 corresponds to the colour above it. For example, pink, in the pastels, corresponds to the bright red in the top row; peach to bright orange, and so on.
  142. 142. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. The round rack in the correct example features colours from just one colour group, brights, for a harmonious colour arrangement. The incorrect example features colours from two colour groups, brights and pastels, which don’t blend together in a harmonious way.
  143. 143. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. The four-way fixture in the correct example features from just one colour group, brights, combined with neutrals. The incorrect example features colours from two colour groups, brights and pastels, which don’t blend together.
  144. 144. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. How to Maximise the Use of Colour  Attract the eye of the customer  Create points of interest  Use contrasts of colour and form  Aim at variety  Create a buying mood
  145. 145. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  146. 146. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  147. 147. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  148. 148. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  149. 149. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Sound & Scent Sound – Music viewed as valuable marketing tool – Often customized to customer demographics - AIE (http://www.aeimusic.com) – Can use volume and tempo for crowd control Scent – Smell has a large impact on our emotions – Victoria Secret, The Magic Kingdom, The Knot Shop – Can be administered through time release atomizers or via fragrance-soaked pellets placed on light fixtures
  150. 150. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. SIGNAGE AND TICKETING Corporate Signs: Branding signs Product Category Signs: Direct consumers to specific categories Promotional Signage: Highlight specific promotions, have short life span, based on the stockturn of the promotion Information Signage: Identify service + service policies within your business Product Signs: These educate customers about the specific product
  151. 151. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Product Category Signage • The bigger the shop, the greater the need for department signage. • The customer should be able to enter your shop and clearly see where the major departments are situated. • Keep the sign simple so it can be easily read. • Be consistent in the style used on all department signage.
  152. 152. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  153. 153. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Promotional Signage • Only use the signs in the key, relevant areas (do not promote roses in the herb department); • Give the promotion a lifespan and keep to it (customers don’t want to see dated, faded and ripped signs); • Use promotional material in an exciting way. Rather than just hang up posters around your shop, group them to catch the customer’s eye.
  154. 154. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  155. 155. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  156. 156. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  157. 157. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Floor signs
  158. 158. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. TICKETING
  159. 159. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. SIGNAGE AND TICKETING How well any sign works depends on how easy it is to read and understand. Signs should look professional. They must be clean & unblemished. • Theme Tickets • Price Tickets • Hard Sell/Soft Sell • Known Value • Unknown Value
  160. 160. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. SIGNAGE AND TICKETING Research in USA has revealed that during the same sale period if 100 products were sold with no signage: Then 170 were sold when handwritten signs were used 265 products were sold when signs were professionally produced to sell the products.
  161. 161. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  162. 162. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Hard sell tickets (yellow + red)
  163. 163. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  164. 164. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Here conversational copy has been rendered in a formally balanced layout Way too wordy. #fail
  165. 165. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. This is a bullet-point copy in an informally balanced layout
  166. 166. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. 25% offselec ted fragranc es from these top brands sale JUVE N AOF SWITZERLAND D ior Elizabeth Arden
  167. 167. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Known Value Lines Products that are purchased on price rather than their benefits as the consumer perceives they know the exact price of these products. Even a 5% increase in price is criticised by consumers but the reverse is that a 5% reduction in price an result in a buying frenzy, eg. cigarettes, petrol, milk, bread…
  168. 168. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Don’t be cheaper than anyone else on KV Lines. It will not help your bottom line. You can match your competition, but don’t go cheaper. Consumers will judge your whole product price strategy based on a few KV lines. Make sure you are aware of the price structure adopted by your competition on these lines. If you are more than 10% more expensive than the price leader, you will be perceived as being too expensive in your whole product. Placement of KV tickets is important.
  169. 169. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Product Signage: KV Lines Bananas $6.50kg One third of sign Two thirds of sign When merchandising KV products, you need your product signage to give the right message
  170. 170. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Non-Known Value Lines Includes 98% of products you sell where the consumer doesn’t know the exact price. They will have some perception of price bands, but they will not argue over the cents. These products will reflect your image and should be of the highest quality. Rely on non-known value lines to promote your business (Box retailers rely on kv lines to promote their image). Promote non-known value lines when doing product- driven promotions.
  171. 171. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Non Known Value Lines Pre-shaped Hamburgers Perfect bun size Easy storage Fast defrost & microwave 6 for $2.50 Great for BBQ’s Name of Product 3 Benefits Price of Product Closing Motivator
  172. 172. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. A 12 foot planogram presenting cookware
  173. 173. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. WHY CUSTOMERS NEED IN-STORE SIGNAGE • Identify advertised lines • Explain hidden benefits • Indicate value & price • Highlight new trends & products • Explain difference between look- a-likes • Remind customers to purchase • Clarify policies • Help customers find products
  174. 174. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  175. 175. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  176. 176. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. HOW TO CAPTURE CUSTOMER INTEREST  Catch your customer’s eye through repetition.  Step your products to provide variation.  Use a pyramid to sell more product.  Try radiating displays.  Be on lookout for ideas from elsewhere.
  177. 177. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  178. 178. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  179. 179. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  180. 180. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  181. 181. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Disordered Pyramid #fail
  182. 182. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Ordered Pyramid #win
  183. 183. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  184. 184. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. BEST SELLERS Located within their own classification in a PRIME position exposed to maximum traffic flow. THEY MUST BE IN STOCK.
  185. 185. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. ADVERTISED AND SELL UP LINESMust be clearly identified and located in the spot directly related to the sale you want from the advertised line. Always located within their own merchandise classification. In a PRIME SPOT if you aim to sell the line in quantity, or If only being used to generate traffic – at the rear of the classification area to pull people through.
  186. 186. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. IMPULSE LINES Close to the advertised line in PRIME location or in a high waiting area (eg. Close to cash desk). Must be clearly visible & in a position on the way to the cash desk, not where it can’t be seen until main transaction has been completed. Merchandise attractively displayed at the aisle line helps promote impulse sales.
  187. 187. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. SEASONAL AND TREND ITEMS Understand when seasonal items will sell and merchandise accordingly. Give them every opportunity to sell at the right time. Use trend items to develop your competitive edge. Be the first with a new idea, if you believe in it. Locate the stock within its own classification & current seasonal or trend classifications which would be at the front of your store or dept.
  188. 188. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. BROWSE ITEMS Items which customers don’t make a quick decision about. Browse items need time and above all, space. Never place near high traffic areas, narrow or busy area or in hot spots near cash register. If you do, it will deter customers from stopping and the goods won’t sell very well.
  189. 189. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. HOT SPOTS
  190. 190. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Traditionally found on ends of gondolas, shelves where traffic is heavy and in the main view points around the store. Most impulse sales will be made from these spots. It is essential that hot spots are identified and known to all salespeople. HOT SPOTS
  191. 191. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  192. 192. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. CREATING HOT SPOTS Areas within a store to move aged, surplus stock or specials. Normally located in high traffic areas WITHIN their own merchandise category. Eliminate Dead Spots by using strong ticketing and good displays rather than placing top sellers in the spot.
  193. 193. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. INTERESTING STATISTIC Research shows a well planned hot spot can increase sales by: 229%
  194. 194. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. HOW TO MAXIMISE SALES UTILISING HOT SPOTS Know where to best position your hot spots. Plan your hot spot displays. Build your hot spots wisely – Present items at customer eye level. – Must have enough product for display to look FULL and to provide impact. – ALWAYS have a sign or you won’t maximise your return per sq. metre. – Wherever possible try to create a pyramidal shape to the display. Best selling shape.
  195. 195. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. MAXIMISE VALUE OF HOT SPOTS Consider: • Products being specially promoted by your store should go on hotspots. • Hot spot displays need to be managed – product level NEVER to go BELOW half full. • Display must be shoppable in the eyes of the customer. • Products should sell three times faster from this display.
  196. 196. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. COLD SPOTS
  197. 197. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. • Dead corners • Poor lighting • Merchandise out of reach • Merchandise above or below eye level • Too wide a display • Too long a shelf (Tip: If your staff keep saying “down the back” it is probably a dead or cold spot) COLD SPOTS
  198. 198. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. HOW TO FACE PRODUCTS CORRECTLY Face more than 3 of a product when: • It is a trendy item. • The product is in season. • The item is featuring in the media. • It is being promoted by your store. • Suppliers are doing a major promotion. • Compile Planograms. • Consider Indenting.
  199. 199. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. COLES
  200. 200. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. MANAGING COUNTER DISPLAYS See the counter as a profit centre. Sell 2 – 3 items from the counter only. Select the right products at the counter. Train the team to sell counter products. Do not clutter the counter. Look past the counter. Make somebody accountable. Introduce housekeeping standards at checkout.
  201. 201. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  202. 202. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  203. 203. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  204. 204. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  205. 205. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  206. 206. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
  207. 207. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Retail Fixtures Prof. Prasad Kulkarni
  208. 208. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Carousels: Circular racks that turn
  209. 209. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Dump tables/bins: A rimmed table or bin used to hold sale or special merchandise on the sales floor, especially in discount operations; it has no formal arrangement.
  210. 210. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Four-way rack A fixture with four extended arms, that permits accessibility to hanging merchandise all the way around
  211. 211. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Rounders Circular racks on which garments are hung around the entire circumference
  212. 212. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. T-stand Freestanding, two-way stand in the shape of a T, that holds clothes on hangers, sometimes with one straight arm and one waterfall.
  213. 213. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Waterfal A fixtures with an arm that slants downward, that contains knobs to hole face-forward hangers with clothing at various levels
  214. 214. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Store management By Prof. Prasad Kulkarni
  215. 215. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Store Management Managing the Store Store Layout, Design, and Visual Merchandising Customer Service
  216. 216. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Questions What are the responsibilities of store managers? How do store managers recruit, select, motivate, train, and evaluate their employees? How do store managers compensate their salespeople? What legal and ethical issues must store managers consider in managing their employees? What can store managers do to increase productivity and reduce costs? How can store managers reduce inventory losses due to employee theft and shoplifting? What are retailers doing to reduce energy costs?
  217. 217. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Buy merchandise – Locate vendors – Evaluate vendors – Negotiate with vendors – Place orders Control merchandise inventory – Develop merchandise – Budget plans – Allocate merchandise to stores – Review open-to-buy and stock position Price merchandise – Set initial prices – Adjust prices 09- 217 Merchandise Management Tasks Performed in a Retail Firm
  218. 218. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Recruit, hire, and train store personnel Plan work schedules Evaluate performance of store personnel Maintain store facilities Locate and display merchandise Sell merchandise to customers Repair and alter merchandise Provide services Handle customer complaints Take physical inventory Prevent inventory shrinkage 09- 218 Store Management Tasks Performed in a Retail Firm
  219. 219. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Promote the firm, its merchandise and its services Manage human resources Distribute merchandise Establish financial control 09- 219 Administrative Management Tasks Performed in a Retail Firm
  220. 220. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Assignment of Responsibility for Tasks Strategist – Top Management, Board of Directors Merchandise Management – Merchandise Division Store Management – Stores Division Administrative – Corporate Specialists 09- 220
  221. 221. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Strategic Importance of Store Management Opportunity to Build Strategic Advantage – Difficult to Have Unique, Compelling Merchandise – Customer Loyalty Often Based on Customer Service Difficulty of Store Managers Job – Managing Diverse Set of Unskilled People – Increasing Empowerment and Responsibility to Tailor Merchandise and Presentation to
  222. 222. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Store Managers’ Responsibilities Varies Dramatically By Type of Retailers – Specialty Store vs. Department Store Entrepreneur – P & L Responsibility – Manage People Responsible for Two Critical Assets – People Sales/Employees – Real Estate Sales/Square Foot © Digital Vision
  223. 223. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Responsibilities of Store Managers
  224. 224. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Steps in Employment Management Process
  225. 225. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Recruiting and Selecting Employees Identify essential activities and determine the qualifications of employees Activities to be performed and performance expectations in quantitative terms Use employees as talent scouts Application forms references, testing, realistic job preview Screen Candidates Undertake Job Analysis Locate Prospective Employees Prepare Job Description Select Employees
  226. 226. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Questions for Undertaking Job Analysis
  227. 227. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Interviewing Questions Education What were your most and least favorite subjects in college? Why? What types of extracurricular activities did you participate in? Why did you select those activities? If you had the opportunity to attend school all over again, what, if anything, would you do differently? Why? How did you spend the summers during college? Did you have any part-time jobs? Which of your part-time jobs did you find most interesting? What did you find most difficult about working and attending college at the same time? What advice would you give to someone who wanted to work and attend college at the same time? What accomplishments are you most proud of?
  228. 228. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Interviewing Questions Previous Experience What’s your description of the ideal manager? Subordinate? Coworker? What did you like most/least about your last job? What kind of people do you find it difficult/easy to work with? Why? What has been your greatest accomplishment during your career to date? Describe a situation at your last job involving pressure. How did you handle it? What were some duties on your last job that you found difficult? Of all the jobs you’ve had, which did you find the most/least rewarding? What is the most frustrating situation you’ve encountered in your career? Why do you want to leave your present job? What would you do if . . . ? How would you handle . . . ? What would you like to avoid in future jobs?
  229. 229. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Interviewing Questions Questions that should not be asked per equal employment opportunity guidelines Do you have plans for having children/a family? What are your marriage plans? What does your husband/wife do? What happens if your husband/wife gets transferred or needs to relocate? Who will take care of your children while you’re at work? (Asked of men) How would you feel about working for a woman? How old are you? What is your date of birth? How would you feel working for a person younger than you? Where were you born? Where were your parents born? Do you have any handicaps?
  230. 230. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Suggestions for Questioning Applicant Avoid asking questions that have multiple parts Avoid asking leading questions like “Are you prepared to provide good customer service?” Be an active listener. Evaluate the information being presented and sort out the important comments from the unimportant. – repeat or rephrase information
  231. 231. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Orientation and Training Employees Orientation Program Training Store Employees – Structured program – On-the-job learning experiences – E-training – Blended Approach – Analyzing Successes and Failures
  232. 232. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Motivating and Managing Employees Leadership – Process by which one person attempts to influence another to accomplish some goal or goals Leader Behaviors – Task performance behaviors – planning, organizing, motivating, evaluating, coordinating store employees’ activities – Group Maintenance – activities undertaken to make sure that employees are satisfied and work well together
  233. 233. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Motivating and Managing Employees Leader decision making – Autocratic leader – Democratic leader Leadership Styles – Transformational leaders – get people to transcend their personal needs for the sake of the group and generate excitement
  234. 234. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Motivating Employees Motivating employees to perform up to their potential may be store managers’ most important but also frustrating task
  235. 235. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Setting Goals or Quotas How High? How Easy to Achieve? Get Participation of Employees in Setting Goals This Sears manager builds morale and motivates her sales associates by holding “ready meetings” before the store opens. At this meeting, the manager is discussing Approaches for improving customer service.
  236. 236. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Why Set Goals? Employee performance improves when employees feel: That their efforts will enable them to achieve the goals set for them by their managers That they’ll receive rewards they value if they achieve their goals
  237. 237. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Individualized Motivation Programs Impact of Goals Differs Across People Different People Seek Different Rewards – A La Carte Reward Programs – Selection of Compensation Plans
  238. 238. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Maintaining Morale Meetings before store opening to talk about new merchandise and hear employee opinions Educate employees about the firm’s finances, set achievable goals and have a pizza party when goals are met Divide charity budget and ask employees how their share should be used Print stickers – sandwich was “wrapped by Roger” Give every employee a business card with the company mission statement printed on the back
  239. 239. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Sexual Harassment Sexual harassment is unwelcomed sexual advances, requests for sexual favors, and other verbal and physical contact
  240. 240. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Evaluating and Providing Feedback to Employees Evaluation – Who, when, how often? Feedback – Performance outcome vs. process
  241. 241. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Factors Used to Evaluate Sales Associates at a Specialty Store 50% Sales/ Customer Relations 25% Operations 25% Compliance
  242. 242. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Evaluation Who Should Do the Evaluation? – In large retail firms – – System is Designed by Human Resource Department – Evaluation is done by immediate supervisors How Often Should Evaluations Be Made? – Annually or semiannually – Feedback from evaluations is the most effective method for improving employee
  243. 243. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Evaluation Format for Evaluations – Objective measures (sales, margin, shrinkage, etc) – Subjective measures (supervisors’ evaluations) Evaluation Errors
  244. 244. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Compensating and Rewarding Store EmployeesExtrinsic Rewards are rewards provided by either the employee’s manager or the firm such as compensation, promotion and recognition – A la carte plans: give effective employees a choice of rewards for their good performance Intrinsic Rewards are rewards employees get personally from doing their job well like doing their job well because they think it is challenging and fun – Job enrichment: the redesign of a job to include a greater range of tasks and responsibilities
  245. 245. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Compensation Programs A compensation plan is effective for motivating and retaining employees when the employees feel the plan is fair and that compensation is related to their efforts Types – Straight salary compensation – Incentive compensation plans • Straight commission • Quota bonus plan
  246. 246. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Designing the Compensation Program Two elements: – the amount of compensation – The percentage of compensation based on incentives Incentive compensation is most effective when performance can be measured easily and precisely – Difficult to measure teamwork, non-selling activities, customer service, merchandising
  247. 247. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Costs Controlled by Store Managers Labor Scheduling Maintenance Inventory Shrinkage Energy Heating Lighting Controlling Costs
  248. 248. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Reducing Inventory Shrinkage Accounting Record – Actual Inventory Sales $1,500,000 - $1,236,00 = 6.2% $4,225,000 Shrinkage = Total shrinkage in the U.S. is estimated at $40.5 billion annually Shrinkage is the difference between the recorded value of inventory (at retail prices) and the value of the actual inventory (at retail prices) in stores and distribution centers divided by retail sales during the period
  249. 249. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Sources of Inventory Shrinkage
  250. 250. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Organized and High Tech Retail Theft Concentrate in over-the-counter medications, infant formula, health and beauty aids, electronics and specialty clothing Items that are easy to sell through Internet like eBay auctions Technology based scams – Counterfeit bar codes at lower prices – Gift cards – Receipt frauds
  251. 251. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Detecting and Preventing Shoplifting Store design Merchandise Policies Security measures – Dye capsules, CTV cameras – Electronic Article Surveillance (EAS) Personnel Policies Employee training Prosecution
  252. 252. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Spotting Shoplifters Don’t assume that all shoplifters are poorly dressed Spot loiterers Look for groups Look for people with loose clothing Watch the eyes, hands, and body
  253. 253. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Reducing Employee Theft Trusting, supportive work atmosphere Employee screening – Honesty test, extensive reference checks, drug testing Security policies and control systems Employee theft is an HR problem Total inventory shrinkage attributed to employee theft is approximately $19 billion annually in the U.S.
  254. 254. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Retail accounting Financial merchandise management
  255. 255. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Financial Merchandise Management A retailer specifies which products are purchased, when products are purchased, and how many products are purchased – Dollar control involves planning and monitoring a retailer’s financial investment in merchandise over a stated period – Unit control relates to the quantities of merchandise a retailer handles during a stated period
  256. 256. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Benefits of Financial Merchandise Plans The value and amount of inventory in each department and/or store unit during a given period are delineated The amount of merchandise a buyer can purchase during a given period is stipulated The inventory investment in relation to planned and actual revenues is studied The retailer’s space requirements are partly determined by estimating beginning-of-month and end-of-month inventory levels
  257. 257. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Hardware Store Profit-and-Loss Statement Sales $417,460 Less cost of goods sold: $ 44,620 Beginning inventory (at cost) 289,400 Purchases (at cost) 2,600 Transportation charges $336,620 Merchandise available for sale 90,500 Ending inventory (at cost) $246,120 Cost of goods sold $171,340 Gross profit Less operating expenses: Salaries $ 70,000 Advertising 25,000 Rental 16,000 Other 26,000 Total operating expenses 137,000 Net profit before taxes $ 34,340
  258. 258. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Benefits of Financial Merchandise Plans A buyer’s performance is rated. Measures may be used to set standards Stock shortages are determined and bookkeeping errors and pilferage are uncovered Slow-moving items are classified – leading to increased sales efforts or markdowns A proper balance between inventory and out-of-stock conditions is maintained
  259. 259. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Inventory Accounting Systems The cost accounting system values merchandise at cost plus inbound transportation charges The retail accounting system values merchandise at current retail prices
  260. 260. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Cost Method of Accounting The cost to the retailer of each item is recorded on an accounting sheet and/or is coded on a price tag or merchandise container Can be used with physical or book inventories: – Physical inventory – actual merchandise count – Book inventory - recordkeeping
  261. 261. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Physical Inventory System Ending inventory - recorded at cost – is measured by counting the merchandise in stock at the close of a selling period Gross profit is not computed until ending inventory is valued Gross profit derived during full merchandise count
  262. 262. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Book Inventory System Keeps a running total of the value of all inventory on hand at cost at a given time End-of-month inventory values can be computed without a physical inventory Frequent financial statements can be prepared
  263. 263. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Disadvantages of Cost-Based Inventory Systems Requires that a cost be assigned to each item in stock Do not adjust inventory values to reflect style changes, end-of-season markdowns, or sudden surges of demand
  264. 264. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Figure 16.1 Applying FIFO and LIFO Inventory Methods
  265. 265. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Hardware Store Perpetual Inventory System Date Beginning-of-Month Inventory Net Monthly Purchases Monthly Sales End-of-Month Inventory 7/1/03 $90,500 $40,000 $ 62,400 $68,100 8/1/03 68,100 28,000 38,400 57,700 9/1/03 57,700 27,600 28,800 56,500 10/1/03 56,500 44,000 28,800 71,700 11/1/03 71,700 50,400 40,800 81,300 12/1/03 81,300 15,900 61,200 36,000 TOTAL $205,900 $260,400 (as of 12/31/03)
  266. 266. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. The Retail Method Closing inventory is determined by calculating the average relationship between the cost and retail values of merchandise available for sale during a period
  267. 267. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Determining Ending Inventory Value 1. Calculating the cost complement 2. Calculating deductions from retail value 3. Converting retail inventory value to cost
  268. 268. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Hardware Store, Calculating Merchandise Available for Sale at Cost and at Retail At Cost At Retail Beginning Inventory $ 90,500 $139,200 Net Purchases 205,900 340,526 Additional Markups __ 16,400 Transportation Charges 3,492 __ Total Merchandise Available $299,892 $496,126
  269. 269. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Hardware Store, Computing Ending Retail Book Value Merchandise available for sale (at retail) $496,126 Less deductions: Sales $422,540 Markdowns 11,634 Employee discounts 2,400 Total deductions 436,574 Ending retail book value of inventory $ 59,552
  270. 270. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Hardware Store, Computing Stock Shortages and Adjusting Retail Book Value Ending retail book value of inventory $ 59,552 Physical inventory (at retail) 56,470 Stock shortages (at retail) 3,082 Adjusted ending retail book value of inventory $ 56,470
  271. 271. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Hardware Store, Profit-and-Loss Statement Sales $422,540 Less cost of goods sold: Total merchandise available for sale $299,892 Adjusted ending inventory 34,136 Cost of goods sold $265,756 Gross profit $156,784 Less operating expenses: Salaries $ 70,000 Advertising 25,000 Rental 16,000 Other 28,000 Total operating expenses 139,000 Net profit before taxes $ 17,784
  272. 272. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Advantages of the Retail Method Valuation errors are reduced when conducting a physical inventory since merchandise value is recorded at retail and costs do not have to be decoded Because the process is simpler, a physical inventory can be completed more often Profit-and-loss statement can be based on book inventory Method gives an estimate of inventory throughout the year and is accepted in insurance claims
  273. 273. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. Limitations of the Retail Method Bookkeeping burden of recording data Ending book inventory figures correctly computed only if the following are accurate: – Value of beginning inventory – Purchases – Shipping charges – Markups – Markdowns – Employee discounts – Transfers – Returns – Sales Cost complement is an average based on the total cost of merchandise available for sale and total retail value
  274. 274. MBA@GIT http://www.mba.git.edu. © Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu. The Merchandise Forecasting and Budgeting Process: Rupee Control

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